North Carolina Sports Betting Tax Revenue Drops Ahead of Hike

The Tar Heel State’s tax hike on sportsbooks may be coming at a good time.

The North Carolina State Lottery Commission has released its sports betting revenue report for June, and the numbers weren’t pretty. While the handle was up by about $9 million, it resulted in only $9,745,219 in tax revenue. That’s the lowest total the state has seen since August of last year, and is a drop of almost $2 million from the previous month.

The state’s tax rate for sportsbooks is set to rise from 18% to 23% starting this month.

Stanley Cup, World Cup Drive Results

The good news for North Carolina is that the dip in tax revenue can be attributed to two events from June.

The first was the Stanley Cup Playoffs, which the Carolina Hurricanes won last month. Many fans placed wagers on the team’s run, resulting in significant losses for sportsbooks. With the NHL season now over, the impact from the Cup win won’t carry over into July.

The other event is the 2026 World Cup, which the United States is co-hosting. While we saw some upsets during group play, the favorites have been winning at a high clip. With those teams attracting the most wagers, bettors have been winning at a higher clip. 

The World Cup knockout rounds have carried into July, meaning North Carolina’s sportsbooks could be in for more losses.

What Will a New Tax Rate Do for NC?

On paper, North Carolina’s 5% tax hike for sportsbooks should lead to a spike in tax revenue. However, we are still waiting to see how operators will look to absorb the new costs.

The most likely response from sportsbooks will be changes to odds and promotions. By offering fewer bonuses and watering down odds, operators can help offset the costs of the tax hike. While this can lead bettors to win less money, the difference won’t be enough to scare many away from the state’s regulated market.

Fortunately, the reasonable hike is unlikely to face the same pushback as larger tax hikes have faced. There is no expectation for sportsbooks to raise minimum bet requirements or add wagering fees for customers. 

The hope is that bettors won’t notice or care about slightly higher costs, allowing both the industry and the state to increase profits. 

An Opening for Prediction Markets?

We discussed the main reasons for North Carolina’s disappointing June numbers, but we didn’t touch on the impact of sports prediction markets. The industry remains live in the state as legal battles over its future continue to play out. Operators have an advantage over sportsbooks because they aren’t subject to state gambling laws and taxes, which allows them to offer more markets and lower costs.

Prediction markets could be to blame for some of June’s revenue numbers, but their impact could grow starting in July. With bettors likely to see costs go up, operators like Kalshi and Polymarket will have an opening to undercut sportsbooks to cut further into the state’s market share.

North Carolina recently approved a new tax for operators offering sports prediction markets. However, the state's ability to enforce those new fees will need to be decided by the US legal system.